For Q2 Gap net sales increased eight per cent compared with last year. Comparable sales increased two per cent compared with a one per cent increase last year. Gap has delivered its seventh consecutive quarter of positive comparable sales growth. Gross profit increased 10 per cent compared with last year.
Gross margin was 39.8 per cent, an increase of 90 basis points compared with last year. The effective tax rate was 23.5 per cent for the second quarter of fiscal year 2018.
During the quarter, the company repurchased 3.2 million shares for 100 million dollars and ended the second quarter of fiscal 2018 with 385 million shares outstanding. The company’s dividends during the second quarter of fiscal year 2018 increased five per cent compared with last year.
Gap ended the second quarter of fiscal year 2018 with 3,626 store locations in 43 countries, of which 3,187 were company-operated. The company continues to expect comparable sales for fiscal year 2018 to be flat to up slightly. The company continues to expect its fiscal year 2018 effective tax rate to be about 26 per cent.
In estimating the earnings per share impact from foreign currency exchange rate fluctuations, the company estimates current gross margins using the appropriate prior year rates.